On January 9, 2019, Mr. Natthaporn Chatusripitak, an advisor to the Prime Minister's Office, announced that the Cabinet (Krungthep) has approved a review of its previous resolution regarding borrowing for the development of the high-speed rail system connecting the Bangkok-Nong Khai region (Phase 1 from Bangkok to Nakhon Ratchasima), also known as the Thai-Chinese railway project. The Cabinet has agreed to allow the Ministry of Finance to secure loans both domestically and internationally from suitable sources and to pass these funds on to the State Railway of Thailand (SRT) for the project's implementation, with a budget framework of 166 billion baht, which was previously limited to domestic borrowing only.

 

The reason for allowing international borrowing is due to the current observation that interest rates abroad are lower than those for domestic loans. Additionally, negotiations are ongoing regarding the terms of international borrowing from the Export-Import Bank of China (CEXIM) under the framework of railway cooperation between Thailand and China, with a joint committee meeting scheduled for January 23-24, 2019, in Beijing.

 

“Between now and July 2019, when payments are due, interest rates are subject to change frequently. However, initially, we consider that if we borrow domestically for a 20-year term, the total interest rate will be 2.86%. If we borrow from CEXIM, the interest rate will be 2.3%, which is very low compared to other foreign financial institutions. I want to emphasize that borrowing from Chinese banks is not solely because it is a cooperative project with China, but rather due to the lowest interest rates available for borrowing,” Mr. Natthaporn stated.

 

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